IRAN is holding Saif al-Adel, the third-ranking member of al-Qaeda, but has refused to hand him over to the United States, the New York Times reported today.

Iran will only surrender al-Qaeda members in its custody in exchange for members of the Iranian opposition group Mujahideen Khalq, many of whom are in US-supervised camps in Iraq, the daily said.

A US official approached Tehran through a third party about taking custody of Adel and other al-Qaeda figures but "did not receive a positive response," the Times quoted a US official as saying.

Among those held in Iran, according to US and Middle Eastern officials, are al-Qaeda's Kuwaiti-born spokesman Sulaiman Abu Gaith; Osama bin Laden's Saudi-born son, Saad; and Abu Masab al-Zarwaqi of Jordan, a close aide to bin Laden.

"We are confident that Iran is holding these people," a US official said.

Adel is thought to have arranged the triple suicide bombings in Riyadh on May 12 that killed 35 people, and to have played a part in the 1998 bombings of US embassies in Kenya and Tanzania, which killed more than 200.

Tehran admitted in late July that it was holding prominent members of the al-Qaeda network but did not identify them.

It was "completing the files" on members of the terror network in its custody before deciding on their fate, foreign ministry spokesman Hamid-Reza Asefi said in a press conference on Monday.